What Is Gig Economy and What Does It Hold For the Future of the Workforce

Introduction

The pandemic caused by the COVID-19 virus has unquestionably had a significant influence on professional and personal aspects of our lives. Although many businesses focus on attracting international customers, consumers like you and me have also developed a heightened awareness of the local businesses close to our homes, thanks to the recent proliferation of online marketplaces.

A job assignment that will only last for a short period is called a “gig”. Gig workers can take temporary work to a new level because of the digital platform that enables them to do so. Although temporary work roles have existed in the past, for example, freelancers, independent contractors, and project-based workers, gig workers have been able to take the interim job to a new level.

Even though gig work and work-based digital platforms are two different things, the gig work market’s evolution has been primarily driven by digital media bringing together supply and demand for labor on a single and frequently accessed global platform. It is anticipated that the value of digital labor platforms will increase to $311.6 billion by 2023, from its estimated worth of $142 billion in 2018.

As a direct consequence, the services that are available through online labor marketplaces have developed into an indispensable component of the routines of a significant number of individuals. For instance, delivery riders on scooters and bikes are increasingly becoming common in cities across several countries.

There is a high rate of technological adoption in South-East Asia, which is one reason the platform economy is regarded as a growth driver in that region. The rise of digital labor platforms has expanded the available options available to consumers, reduced the costs incurred by businesses, and increased the number of employment opportunities available worldwide.

People spending more time online may be behind the recent boom in freelance and contract work popularity. In addition, many of us now strongly prefer to avoid direct physical contact in public places like stores and restaurants.

The number of apps that cater to various aspects of the service industry that fall under the purview of the gig economy has increased dramatically over the past few years, contributing significantly to the gig economy’s explosive growth.

COVID-19 has created a paradigm impact on how the workforce functions globally. The expansion of the gig economy has only accelerated. The simple reason is that people staying home and minimizing their contact with others have opted for personal home deliveries for various daily chores and consumer necessities.

Based on a report published by Mastercard, the total value of global transactions associated with the gig economy is projected to increase by 17% each year and reach approximately $455 billion by the year 2023.

Examples Of Gig Economy Applications:

• Uber: The gig economy is best exemplified by Uber, particularly considering the Uber Driver Partners app. Uber serves as a prime example of this type of business. Here, anyone can choose to begin earning money by connecting their vehicles based on their availability, route, and convenience to the platform.
• HopSkipDrive: is a fantastic business concept that aims to simplify the commuting process for children whose parents have active schedules and may not have the time to drop them off at their respective schools or coaching classes. They conduct meticulous background checks on their drivers, requiring them to be at least 23 years old and have a demonstrated track record of working with children. It is a reliable and trustworthy platform for parents and offers an excellent earning opportunity for drivers covered by providing comprehensive insurance.
• ParkingPanda: With the growing population across the globe, traffic on the roads is at an all-time high and increasing continuously. Thus, parking space is a luxury. The owners of living spaces and the people looking for such space can be brought together through this app, which turns a luxury amenity into a potential source of income for the space providers. Anyone can publish online the availability of their parking space according to their preferences, and they can generate revenue by renting it to a customer who requires it.
• Airbnb: What the Uber Driver Partners’ app is in the space of transport, Airbnb is in housing property. Owners of any housing property can post online their property’s availability for any possible rental agreement. These rental agreements can range from a few hours to days or months. There is also a provision for a referral bonus, which is available for both customers and providers.
• Lyft: is a company that, in a manner very analogous to Uber, connects its driver partners with riders. In addition, the company offers a Primetime pricing feature, which enables drivers to earn additional income during heavy pedestrian and vehicular traffic. To outperform Uber, which claims that drivers earn about $30 per hour on average, it argues that drivers can earn up to $35 per hour using its service.

Key Growth Drivers

Growing International Labor Markets

Businesses will continue to expand their operations across international borders despite global trade conflicts and the pandemic. Six of ten domestic businesses will currently have an international customer base by 2030.

This will also affect the labor market, and four out of ten businesses believe that the ability to hire employees from all over the world will be essential by the year 2030. This shift is primarily driven by several key drivers, chief among them being the demand for skilled personnel and the internationalization of business.

Technological Evolution

Expanding local businesses overseas has its pros and cons, such as legal, and financial, local customs and traditions. However, technologies such as the cloud and mobile connectivity have proven to be game changers for internationalization. These technologies allow white-collar employees to work outside the office, set up cloud-based e-commerce services, or remotely operate equipment and facilities over a secure connection.

Enterprises are increasingly adopting technologies such as cloud computing, 5G networks, virtual and augmented reality, and the Internet of Things (IoT). More than two-thirds of decision-makers believe these technologies contribute to internationalization.

On the other hand, this internationalization necessitates developing ICT (Information and Communication Technology) solutions not constrained by geographical borders or boundaries. Some examples of these solutions include the internet of things, the cloud, and mobile connectivity.

As a result of this development, businesses can now establish a global presence without the prerequisite of establishing a local branch or recruiting local employees.

The Role Of Digital Platforms

From 2007 to 2020, the number of platforms increased by 10x, and recent estimates (as of January 2021) place the total number of digital labor platforms at close to 800. Most efforts to understand how many people participate in the gig economy have relied on surveys or administrative data (such as data from banks, governments, or platform providers). Most of these efforts have concentrated on the Northern Hemisphere.

For example, surveys conducted in the United States and the European Union found that 16% of adults in the United States have earned extra dollars via a gig platform.

Similarly, in the 14 EU, states11% of the working-age population (between 16 and 74) have earned money or provided service via a platform, while a smaller proportion use digital labor platforms as their primary source of income (1.4% for EU citizens, though the figure is higher in the Global South and on location-based platforms).

There is also the possibility of utilizing administrative data provided by banks and government tax data. For instance, several studies examine the total number of active workers on platforms and then divide that figure by the total population of people of working age in the country.

Typically, only a subset of media is used for the study. It is estimated that between 0.5% and 1.5% of adults participate in digital labor platforms in the United States.

The Online Labor Index, a component of the labor Project housed at the Oxford Internet Institute, keeps a constant eye on the number of jobs and assignments performed across all platforms.

Between May 2016 and January 2022, the raw data shows that the number of online-based tasks on the most prominent digital platforms will have increased by approximately 65%. Additional data on dollar inflows from freelancing, more specifically, show how much of a revenue source comes from domestic versus international employers.

Some of the other critical findings by OLI are:

• Between 2017 and 2022, the proportion of global online workers in the US has fallen from 9.5% to 2.5%. Russia, Pakistan, and Ukraine had the most significant increases in the share of global online labor, each rising between 2.3 and 2.9% points over this period. However, the current war in Ukraine and Russia renders these figures largely outdated and irrelevant to how their future landscapes might look.

As of March 2022, India contributes 25% of the online labor market.

The Future Outlook

The paradigm shift and disruption caused by the COVID-19 pandemic are unprecedented. New trends are shaping up for the global workforce. In addition, the working environment is further influenced by factors such as shifts in the economy, technological advances, increasing levels of automation, and globalization.

A plethora of game-changing shifts are on the horizon for how we recruit and keep our most talented employees as a direct result of this. Let’s look at the future of working in the “New Normal.”

Working Remotely Is Here To Stay: Working from home, a co-working space, or a coffee joint is a 360-degree shift from the conventional office-centric employment model. The substantial advancement of numerous aspects of technology utilised in the workplace has given remote work an advantage over traditional methods. Added to the situation is the involvement of GenZ.

They are the most recent generation to enter the modern workforce Z, and in general, members of this generation have a unique perspective on handling various situations. The members of this group were born between 1997 and early 2010, and the eldest member is currently 25 years old. It is anticipated that by the year 2021, members of Generation Z will be as much as 40% of the total workforce worldwide.

In addition, the proliferation of sophisticated time management, communication, and employee productivity software tools indicates the growing popularity of working from home and how employees view the possibility of working remotely. GenZ adores the newly discovered freedom and flexibility that comes with the option of working from home.

In addition, COVID-19 has brought about a variety of lockdowns and quarantine protocols, which prevent employees from going to the office. In the United States, 48% of workers work from home, and another 22% of jobs are expected to be done remotely by 2025.

A further benefit of working remotely is that it enables one’s personal and professional lives to coexist harmoniously. For instance, modern mothers can attend to their responsibilities as parents and handle professional roles without commuting to a physical office. When all these advantages are considered, it should be no surprise that 65% of workers would instead work from home full-time (Flexjobs, 2020).

The emergence of digital nomads and the proliferation of workforce innovations are driving a rapid transformation like work that can be done from a distance. As the global workforce adjusts to the new norm, telecommuting and other forms of remote work will become increasingly commonplace.

Even though this trend is only in its infancy stage, it will undoubtedly become a fascinating phenomenon. According to the findings of one study, once the COVID-19 crisis is resolved, 80% of executives at companies plan to permit their employees to work remotely for a portion of their working hours (Flexjobs, 2020).

Proliferation Of Flexible Work Schedules: For a very long time, working-class members have been accustomed to adhering to a work schedule that runs from 9 am to 5 pm. On the other hand, given that today’s workers increasingly value the opportunity to perform their jobs from any location and at any time, this schedule is on the verge of extinction.

In addition, the employees’ daily lives have become more hectic, and the working environment has become more international. The COVID lockdown has also resulted in a rise in work-from-home arrangements, which fits in quite nicely with those arrangements.

This change in the working environment, combined with the disruptive forces brought about by technological advancement, points to a shifting landscape. Workers in today’s modern economy naturally prefer a more flexible work schedule.

In addition, there are a lot of reasons to think that a shift in the work schedule has been way overdue for a long time. For instance, working from home and having a flexible schedule led to an increase in productivity of nearly 13 percent (Vantage Circle, 2021).

Some workers have such a strong preference for flexible work schedules that they claim they would prefer not to be provided with medical benefits if they could instead have the option of selecting their work hours.

One company in New Zealand was interested in investigating whether a workweek consisting of only four days would be beneficial. Two months into the experiment, the company discovered that by implementing such a schedule, employee work-life balance improved by 24%, employee engagement increased by 28%, and employee stress levels decreased by 7% (CNN, 2018).

Today, many businesses have started adopting this practice, and as a result, more flexible work schedules are available. For instance, eBay has begun providing its customer service representatives with the opportunity to participate in the eBay@Home program (Fortune, 2018).

In addition to that, various agencies have shown that they can step up to the challenge. A four-day workweek is something that the United Kingdom’s labor union is trying to get passed. After all, 29% of workers believe that increased work flexibility helps improve their overall productivity (PwC, 2020).

Healthcare Will See A Paradigm Shift: Healthcare system for the gig workers is akin to an Achilles heel, at least in the United States. According to the most recent statistics from the Kaiser Family Foundation, approximately 49% of Americans obtain medical coverage through their full-time employment. These individuals will have difficulty accepting the idea that it is worthwhile to participate in the gig economy by sacrificing their employer-sponsored healthcare.

If the gig economy is to achieve its full potential, some aspects must undergo significant transformation. Imagine a world where someone spends part of their morning working as a VA. Then, in the early afternoon, the individual is engaged as an Uber driving partner. The big question is how that gig worker will earn their healthcare cover.

Sooner or later, some start-ups will come up with solutions as this presents a significant gap in demand and supply. Even though the government has lowered the premiums that gig workers had to pay for health insurance, this measure was only a stopgap solution. The gap must be addressed in the future so the Gig economy can realize its full potential.

Attrition Will Continue Rising: It is no longer a competitive advantage to offer workers flexibility in executing and delivering their tasks. Instead, this perk has become the industry standard. Employees in the United States anticipate having some degree of flexibility in their day-to-day work just as much as they anticipate having access to a 401(k).

Employers who do not provide their workers with the opportunity for flexibility can expect an increase in employee turnover as workers look for positions that offer a value proposition more closely aligned with their personal preferences.

For many businesses, increasing flexibility in today’s demanding labor market will not give them reprieve from their workforce moving on. Attrition will increase for two reasons.

The first reason is that fewer people are available to fill open positions. In the current business scenario keeping employees in their seats will become less potent. Professionals who work in a hybrid or remote arrangement have fewer friends at work and, as a result, have weaker social and emotional connections with their co-workers.

By reducing the social reason that can drive employees to stay longer at their jobs, these weaker connections make it simpler for employees to quit their jobs. It is ascertained that employee interpersonal relationships are fragile and can be easily broken.

Second, as the number of businesses that could hire potential candidates grows, a greater variety of attractive alternatives could tempt workers to leave their current positions.

As hybrid and remote work becomes the norm, the geographic radius of the organizations that someone can work for also expands. The simple reason is that more people can work in various settings. Even in a hybrid model, where employees are expected to come into the office at least once a week, this increased risk of employee turnover continues to exist.

Employees are willing to take on a longer commute when required less frequently to visit their workplace. Parallelly the pool of potential employers widens alongside employees’ commute tolerance.

These factors will lead to sustained attrition rates that are higher than any historical norms, and these rates will continue to be higher. The widespread resignation will give way to a steadier employee turnover.

Employee Well-Being & Work-Life Balance: Today, working through the night or putting in long weeks to increase one’s income is not suggested. Employees in the modern era are increasingly interested in having a better balance between their work and personal lives, as well as perks that positively influence their health—considering that 69% of workers are stressed out from the demanding working conditions due to the pandemic. This development required most of them to work from home (CNBC, 2020).

When considering the historically low unemployment rates, you have a market environment full of uncertainty for businesses. Work-life balance is a trend that has given the impetus to maintain the happiness and contentment of the workforce across the globe.

The race is on among businesses to develop and implement plans for more flexible work schedules to compete for the best employees and increase the percentage of employees who remain in their jobs. Work that is performed away from the office, shortened workweeks, and improved onsite amenities are some of the other factors contributing to this trend.

Over the past ten years, mental health problems, burnout, and stressed-out workers have become increasingly common. Because workers were so committed to their jobs, these issues crept into our places of employment, and as a result, we paid less attention to the health and safety of our employees. However, in recent years, the well-being of employees has emerged as a topic that has gained increased attention from employers and employees.

More and more businesses have realized this and are instituting workplace wellness programs to improve their workforce’s overall health and quality of life. For instance, in today’s world, it is not uncommon to find contemporary workplaces that include onsite fitness centers, cafeterias, childcare, and medical care facilities.

A brand-new perk is quickly overtaking all the onsite amenities in importance. According to the findings of one study, 70% of workers believe that having access to natural light boosts their performance at work, and 78% say that it positively impacts their well-being (ThisWeekinFM, 2020). On the other hand, employees reported feeling fatigued 47% of the time and depressed 43% when there wasn’t enough natural light (ThisWeekinFM, 2020).

A lot of work has to be accomplished to enhance the well-being of workers at their places of employment. For instance, businesses are investing more money in teambuilding activities to alleviate the feelings of isolation associated with employing remote workers.

Additionally, there has been a discernible rise in companies providing training in topics such as mental health and resiliency. The most advanced HR software also adds some of these capabilities to their most recent features, such as tracking these events and including them in payroll calculations.

We anticipate that as the competition for top talent heats up, a significant differentiator in attracting employees will be the degree to which an organization prioritizes the health and happiness of its workforce.

More Emphasis On CSR Activities: The business world is witnessing many unprecedented developments. The entry of younger workers, the constantly shifting social and political climate, and the ever-increasing rates of job-hopping are just a few examples of the factors that have contributed to this change.

As a result of the increasingly unstable environment, businesses are having difficulty luring the best and brightest employees. It is because prospective employees are no longer looking for companies that merely project a positive image.

Candidates for jobs in today’s market are looking for employers who can demonstrate a genuine desire to uphold values and prioritize social responsibility. In today’s incredibly cutthroat business environment, the corporations that prioritize and act on their corporate social responsibility stand out from the crowd.

Therefore, it shouldn’t come as much of a surprise that a growing number of businesses are developing social purposes through the provision of community service and the formation of partnerships with other organizations with similar goals. More and more organizations have started incorporating “Giving Back” in their mission.

In addition, the numbers suggest that incorporating social responsibility affects the performance of companies. Based on the findings of a recent research study, more than half of consumers are prepared to pay extra costs for goods or services if they come from a company with a reputation for being socially responsible (VantageCircle, 2021). It also aligns the organization with millennials’ aspirations, 78% of whom name corporate social responsibility as one of the reasons they want to work for a particular company (VantageCircle, 2021).

The Gig Economy Will Continue To Stay: The paradigm shift created because of COVID-19 has given impetus to the rising community of “Freelancers” and “Self-Employed” professionals across the globe.

The traditional employment model of working from 9 to 5, 5 days a week is being abandoned in favor of more flexible work schedules, leading to a meteoric rise in the gig economy. The percentage of workers in the US employed in the gig economy is expected to reach 35% in 2022. It was 14% in 2014. (Forbes, 2020).

This upward trend will continue, considering that the pandemic will still be present in 2022 and possibly in the following years. After all, 56% of people working in the United States have jobs that can be done from home or done in a manner equivalent to home-based work (Forbes, 2021).

The gig economy generally consists of three primary elements: A prospective buyer looking for services, A freelancer or a gig worker, and the digital platform connecting the consumer to the worker. The arrangement of the gig economy currently provides the benefits that the modern labor force yearns for. Thanks to this arrangement, they can choose the company they want to work for, determine their work schedule, and continue to be productive while on the road.

The development of technology has resulted in the proliferation of multiple online talent markets geared toward independent contractors. Consequently, gig workers now have unprecedented flexibility in deciding their hours and location without compromising their financial stability.

An interesting question that arises is What sort of opportunities and challenges does the expansion of the gig economy present for businesses? The gig economy enables individuals to access a diverse pool of expertise by utilizing adaptable and user-friendly platforms. It results in significant cost savings for small and medium-sized businesses (SMBs), which frequently do not have the financial strength to attract top talent.

Concluding Remarks

Every year, companies must contend with introducing novel concepts and emerging trends that challenge how they operate and carry out their activities. These disruptions have been hastened even further by the fact that the COVID-19 pandemic is currently ongoing.

The workplace is not an exception to the rule that change is eternal. Because of this, we decided to highlight the most critical trends in the workplace to assist you in keeping up with the changes in societal norms and what employees value.

There is a continuous shift in the character of work. The modern workforce comprises members from various generations working together. The outlook of the employees has also changed towards evaluating and defining what an ideal employer is, and in response, employers are making training and skill development a proactive priority.

These trends are moving toward a more fluid landscape for employees, acknowledging the increasingly blurry lines between their personal and professional lives. You need to keep an eye on how these trends will develop over the next few years, whether you are just starting in business or have been running your own company for a long time.

DivIHN Workforce Solutions 

DivIHN Integration Inc. offers alternative talent solutions to help organizations reimagine their talent strategy. Our expertise includes  

1. Enterprise contingent staffing 
2. MSP-Channel Staffing 
3. Direct-Hire Staffing 
4. Flexible Staffing 
5. TalentGen 
6. Staffing Advisory 

To know more, please write to [email protected].